Volkswagen AG, Europe’s biggest automaker, said Wednesday that sales for all its brands rose 11 per cent through the end of August compared to last year, but warned that its German plants were barely profitable.Â Horst Neumann, the management board member who oversees human resources, told a meeting of nearly 15,000 VW workers in Wolfsburg that the company had sold 3.75 million vehicles in the first eight months of the year,Â with 2.2 million of those VW-branded cars, an increase of 12.5 per cent from 2005.

The Volkswagen Group includes the Audi, SEAT and Skoda brands, among others.

He said the gain was because of new additions to its lineup, including the popular Golf and Beetle models, but said that the results shouldn’t distract from cutting costs and reining in expenses.

The German plants have barely generated profits “and are miles away from our profitability goals,” he said.

Volkswagen is seeking to drastically cut production costs for its VW-brand vehicles such as its flagship Golf, which are selling strongly but bringing in little profit. It disclosed last year that it intends to cut as many as 20,000 jobs in Germany. Since June, about 85,000 VW workers in western Germany have been offered severance packages ranging from 41,000 euros to 250,000 euros (about US$52,500 to $320,250), depending on their salary level and years of service.

The company also wants to extend the work week at six plants in western Germany that manufacture VW-brand cars from the current 28.8 hours to 35 hours, but talks with its union, IG Metall, have not yielded any deal. The talks are set to resume Friday.

Volkswagen’s chief labour representative Bernd Osterloh on Wednesday reiterated demands for concrete investment and production plans at the company’s six western German plants. [autonews24h]